Bumi weighs claim against Nat Rothschild and banks over failed float

Bumi, the coal miner at the centre of a bitter power struggle, plans to use a
law firm report into more than $2bn (£1.25bn) of alleged missing funds to
launch potentially explosive compensation claims.

Senior sources at the company, formed from an ill-fated $3bn deal in 2010 between financier Nat Rothschild and Indonesia's Bakrie family, said the law firm's inquiry was a crucial step in the fight to compensate shareholders.

Macfarlanes presented its report into alleged financial wrongdoing at the group’s 29pc-owned associate Bumi Resources and 85pc-held subsidiary Berau Coal at a board meeting on Thursday. Bumi is expected to disclose key findings on Friday.

While Bumi plans to pass the report to Indonesian financial regulator Bapepam, and possibly Britain’s Serious Fraud Office, the source said the damages claims could extend beyond those directly responsible for the missing funds.

“We are looking at who knew what when and have a duty to look at the role of the advisers in this,” said the source. “We will assess whether there are grounds for a legal claim against JP Morgan, Credit Suisse, Mazars and Nat.”

JP Morgan Cazenove advised Vallar, the cash-shell used by Mr Rothschild to do the Bumi deal. Credit Suisse, an adviser on Vallar’s float, also has a long-standing relationship with the Bakries and advised Bumi Resources, which is expected to be criticised in the Macfarlanes report. Mazars is the auditor to Bumi Resources.

Any action against Mr Rothschild, whose Vallar Advisers advised on the deal, will inflame the feud with the board. It was brought to a head last week by the financier calling an EGM in a bid to sack 12 of Bumi’s 14 directors. He has 18.2pc of the votes.

There are also risks of embarrassment for the board, given that Lord Renwick, the non-executive who has from the outset chaired Bumi’s audit committee, is a vice-chairman of JP Morgan Cazenove, while senior non-executive director, Sir Julian Horn-Smith, chaired Vallar at the time of the deal. Both approved the Indonesian transactions that created Bumi.

Mr Rothschild yesterday wrote to Bumi expressing a “loss of confidence” in the Macfarlanes’ investigation after alleged “interference and censorship” by the company. He said this was exacerbated by selective leaks “designed to generate spurious embarrassment” for him, rather than address the “central question” of the “serious financial irregularities”.

The financier urged the company to “produce an uncensored copy of the final Macfarlanes report” and called for the appointment of "a suitably independent lawyer to review expeditiously all relevant matters pertaining to the investigation and report".